We have identified a new population of CD11b+F4/80+CD68+ (macrophages) that express Foxp3. Our initial results indicate that these cells were observed in spleen, lymph nodes, bone marrow, thymus, peripheral blood, liver and other tissues. We devised a strategy to highly purify CD11b+F4/80+Foxp3+ macrophages using the Foxp3-GFP mice. Our results show that CD11b+F4/80+ macrophages expressing Foxp3 inhibited the proliferation of T cells whereas Foxp3neg macrophages did not. Foxp3pos macrophages inhibited the proliferation of T cells through cell: cell contact mechanisms or soluble factors. Ablation of Foxp3 expression on CD11b+F4/80+Foxp3+ cells results in their lost capacity to inhibit the proliferation of T cells confirming that Foxp3 is directly responsible for conferring suppressive capabilities to this subpopulation of macrophages. The cytokine and genomic profiles of Foxp3pos and Foxp3neg macrophages were distinctive indicating that these cells have different biological functions. Furthermore, Foxp3pos macrophages induce de novo conversion Tregs, in contrast Foxp3neg macrophages did not. Functional analysis indicated that CD11b+F4/80+Foxp3+ macrophages are important for tolerance induction and are involved as well in tumor promotion and progression. For the first time, these studies demonstrate the existence of a distinct subpopulation of naturally occurring macrophage regulatory cells (Mac-regs) in which their suppressive function is directly correlated to the expression of Foxp3. Taken together our preliminary results lead to hypothesize that CD11b+F4/80+Foxp3+ cells (Mac-regs) subpopulation is an important subset of regulatory cells critical in the homeostatic balance of the immune system regulating immune responses which contribute to T cell tolerance induction and tumor promotion/growth. In order to test our hypothesis the following specific aims will be addressed: Aim 1 will define the mechanisms by which Mac-regs inhibit other cells; Aim 2 will evaluate the mechanism of tolerance induction by Mac-regs; and Aim 3 will evaluate the role of Mac-regs in tumor promotion and growth.